KSE

Pole player in cattlefeed segment

Formerly known as Kerala Solvent Extractions Ltd, KSE, a leading manufacturer of compound cattlefeed, is also engaged in the extraction of oil from oil cakes using the solvent extraction method, and processing of milk and milk products. The company, which set up Kerala’s first solvent extraction plant in 1963, has by now emerged as a dynamic force, earning its stripes as the largest manufacturer of compound cattlefeed in the private sector in India. Starting with a solvent extraction plant over six decades ago, it has evolved today into a leading agri processing entity operating in three segments — animal feed, oilcake processing and dairy.

The company has steadily grown in its financial performance. During the last 12 years, its sales, operating profit and net profit have all expanded by two and a half times. With sales turnover rising from Rs 697 crore in fiscal 2013 to Rs 1,683 crore in fiscal 2024, operating profit has moved up from Rs 13 crore to Rs 32 crore and the profit at net level has inched up from Rs 13 crore to Rs 32 crore. What is more, prospects for the company are all the more promising going ahead. Consider:

• n the segment of cattlefeed, the company reflects not only growth in numbers but also its unwavering commitment to innovation and excellence in the solvent extraction and ready mixed cattlefeed sectors. With the rising demand for meat and animal-based products, commercial livestock production is on the rise and is the primary driver of the Indian animal feed market. According to experts, the Indian cattlefeed market size is expected to grow at a CAGR of 8.7 per cent during the next five years. This is bound to push up the pace of growth of KSE
• Growth prospects for the oilcake processing segment, are also immense as KSE has vast experience in these segments spanning over 50 years. Again, its market leadership and its adherence to high quality standards have stantially improved its acceptability in the market. A testament to its relentless pursuit of quality and productivity is a string of awards and accolades.

DAIRY INROADS

• Beyond feed production and cake processing, KSE has diversified its operations into milk procurement and processing, introducing well-received brands like KS Milk, KS Ghee and Vesta Ice Cream in various districts of Kerala. This diversification underscores the company’s adaptability and responsiveness to evolving market demands. Prospects for the dairy segment have got a boost on account of the reputation and brand image of the company for the quality of its products.
• The company’s financial position is extremely strong, with reserves on March 31, 2024 standing at Rs 222 crore – 74 times its tiny capital of Rs 3 crore. Borrowings are very small and as a result the interest burden last year on the company was negligible at around Rs. 3 crore, a small fraction of the company’s turnover of Rs 1,683 crore. Again, this financial strength has been leading to better purchasing power, helping the company to build up stock on favourable situations. Again, this financial strength also helps withstand the unhealthy market conditions.

GROWTH PLANS

• z KSE is committed to strategic growth. The company is taking significant steps towards becoming growth-oriented and building strong organizational capabilities. The company has decided to formulate a growth strategy for the coming years. Grant Thornton, an internationally acclaimed accounting and consulting agency, has been engaged to conduct a detailed strategic study of the opportunities and threats of the external marketplace conditions as well as the strengths and weaknesses of the internal operations of the company.

In FY 2025, we expect the company to register EPS of Rs 314.3, which is likely to rise to Rs 411.8 in FY 2026. The scrip trades at Rs 2,493. P/E on FY 2026 EPS works out to 6.1. In FY 2026, its book value is expected to near the Rs 1,350 mark. P/FY 26BV works out to 1.85.

PERFORMANCE INDICATORS (Rs. in crore)